NSC 2022 interest rate: calculation of the national savings certificate Rs 5L to Rs 7L
NSC 2022 interest rate, national savings certificate interest rate and tax benefits:
National savings certificate (NSC) interest rate 2022-23: NSC is a popular savings vehicle with decent, guaranteed returns. Government-issued NSCs come with a 5-year blocking period. Interest is compounded annually but paid to the subscriber at maturity. Even Prime Minister Narendra Modi invested part of his income in NSCs.
You can use NSCs for small and medium savings. If planned wisely, these certificates can also be used for regular monthly income. (See calculation of NSC interest below). Experts say NSC is suitable for conservative investors who want to accumulate wealth while preserving their capital.
Where to buy NSC
You can buy national savings certificates at the post office.
Who can buy NSCs?
An individual can purchase NSC for his own account or on behalf of minors. NSCs can be held jointly by up to two joint holders on a joint basis or on a survivor basis.
Also check: the latest interest rate and the PPF calculation
NSC 2022 interest rate
The current interest rate offered by the government on the National Savings Certificate is 6.8%. The Indian government reviews the interest rates on NSCs and other savings plans on a quarterly basis. Therefore, the NSC 2022 (first quarter of New Years) interest rate will be known on December 31, 2021.
Calculation of NSC Interest
Based on the current interest rate, the value of an NSC worth Rs 1000 today would rise to Rs 1389.49 after five years.
If you buy NSC for Rs 1 lakh today, the value of your holdings will increase to Rs 1.38 lakh after 5 years.
Since there is no maximum limit, you can purchase NSCs for any amount you choose. If you buy NSC for Rs 5 lakh today, the value of your holdings will become Rs 6.94 lakh at maturity after five years.
Interest on NSCs is compounded annually but paid at maturity. This means that if you buy NSC for a certain amount, say Rs 10,000, every month for five years, you can earn interest of Rs 3,895 + the principal Rs 10,000 each month for the next five years. After five years, if you reinvest the capital every month, you will continue to earn Rs 3,895 / month from these certificates until you continue to hold them.
Minimum and maximum deposit limit
You can buy NSC in denominations of Rs 100, 500, 1000, 5000 and 10,000. The minimum amount required is Rs 100. There is no limit on the maximum amount you can invest in NSC.
Also check | Latest interest rate and SCSS calculation
NSC Tax Advantage
The amount invested in NSC benefits from tax advantages under Article 80C. Accrued interest is taxable but is deemed to be reinvested. Therefore, interest also becomes eligible for deduction under section 80C (subject to the limit prescribed under that section).
When exchanging the value of the certificate, no TDS is deducted. However, interest income earned is fully taxable in the hands of the investor depending on the income bracket.
NSC transfer rule
The transfer of NSCs is authorized. They can be transferred from one person to another. For the transfer of NSCs, the consent of a designated post office official is required in situations such as transfers to the heir of a deceased holder, by court order, to a close relative such as the wife, or transfer to a bank, housing company or other institutions as security.
NSC advance collection
NSCs can be redeemed early in the event of the death of the holder, by court order or confiscation by a pledgee. Only the face value is paid if the NSCs are redeemed within one year from the date of purchase of the NSCs. The simple interest rate applicable to the postal savings account is paid if the collection is made after one year but before three years from the date of purchase of the securities. Certificates can be redeemed as a present value after three years.
NSC nomination rule
NSC holders are allowed to declare a candidate. This can be done at the time of purchasing the certificates or even at a later stage. It is important to note that appointment is not allowed on certificates held in the name of a minor. The option to modify or cancel an appointment is also available.
5 key benefits of NSC
- Use as collateral
- Use to save tax
- Government guaranteed returns
- Decent interest rate
- Low risk investment option
NSC as a guarantee
You can use national savings certificates as collateral to take out a loan from any financial institution or bank.
Who can’t buy NSC?
According to the rules, NSCs cannot be purchased by NRIs, HUFs, corporations, trusts, corporations or other institutions. In the event that an individual becomes an NRI after purchasing the certificate, they can keep it until maturity on a non-repatriation basis.
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